Exhibit 4(j)
AMENDMENT TO LOAN AND WARRANT PURCHASE AGREEMENT
AND TO TERM NOTE
THIS AMENDMENT TO LOAN AND WARRANT PURCHASE AGREEMENT AND TO TERM NOTE
(this "Amendment") is made effective as of October 25, 1996, by and between
SANDBOX ENTERTAINMENT CORPORATION, a Delaware corporation ("Sandbox"), which was
formerly TRACER DESIGN, INC., an Arizona corporation (the "Predecessor"), and
____________________, whose address is _________________________________________
("Purchaser").
RECITALS
A. Pursuant to that certain Loan and Warrant Purchase Agreement dated
as of October 25, 1995 (the "Loan and Warrant Purchase Agreement"), the
Predecessor borrowed $_________ from Purchaser in consideration of the
Predecessor issuing to Purchaser a warrant (the "Initial Warrant") to purchase
__________ shares of the Class A Common Stock, $.001 par value of the
Predecessor (the "Initial Warrant Shares") at an exercise price of $____ per
share (after giving effect to certain subsequent stock splits and anti-dilutive
adjustments, the Initial Warrant is currently a warrant to purchase ____________
shares of the Common Stock, $.001 par value of Sandbox (the "Common Stock") at
an exercise price of $.80 per share), on the terms and subject to the conditions
set forth in the Loan and Warrant Purchase Agreement.
B. In connection with the Loan and Warrant Purchase Agreement, the
Predecessor also gave Purchaser a Term Note dated as of October 25, 1995 in the
principal amount of $_________ (the "Term Note"). Pursuant to its terms, the
Term Note is due and payable in full on October 25, 1996.
C. Sandbox wishes to amend the Term Note to, among other things, extend
the maturity date an additional six (6) months and lower the interest rate for
this extension period. Purchaser has agreed to such amendments to the Term Note
in consideration of Sandbox issuing to Purchaser a new warrant to purchase 625
shares of Common Stock (the "New Warrant Shares") at an exercise price of $.80
per share, pursuant to a warrant in the form attached hereto as Exhibit A (the
"New Warrant") on the terms and subject to the conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, Sandbox and Purchaser agree as follows:
1. Incorporation by Reference. The terms and conditions of the Loan and
Warrant Purchase Agreement, the Term Note and the Recitals above are
incorporated by reference. Any capitalized term used herein and not otherwise
defined shall have the meaning ascribed to such term in the Loan and Warrant
Purchase Agreement.
2. Issuance, Sale and Delivery of New Warrant. At the New Closing
(defined in Section 3 hereto) Sandbox agrees to issue and deliver to Purchaser
and Purchaser agrees to receive from Sandbox the New Warrant in consideration of
Purchaser agreeing to the amendments contained herein.
3. Closing. The issuance and delivery of the New Warrant shall take
place at the offices of Sandbox as soon as possible on such date and at such
time as is mutually agreed upon by the parties (such transaction being the "New
Closing" and such date and time being the "New Closing Date"). At the New
Closing Sandbox shall issue and deliver to Purchaser the New Warrant registered
in the name of Purchaser and the Term Note shall be deemed amended as of October
25, 1996 as set forth herein.
4. Representations and Warranties of Sandbox. Sandbox makes the same
representations and warranties with respect to the issuance of the New Warrant
and the New Warrant Shares as of the New Closing Date that were made by the
Predecessor in Section 3 of the Loan and Warrant Purchase Agreement with respect
to the Initial Warrant and the Initial Warrant Shares, with the following
amendments:
(a) Organization and Standing; Charter and Bylaws. Sandbox is
a corporation duly organized and existing under and by virtue of the
laws of the State of Delaware.
(b) Capitalization. The authorized capital stock of Sandbox
consists of: 2,000,000 shares of Series A Preferred Stock, $.001 par
value, of which as of October 25, 1996 1,218,750 shares were issued and
outstanding (Sandbox has approved that certain Sundance Stock Purchase
Agreement, pursuant to which up to an additional 750,000 shares of
Series A Preferred Stock will be issued); 10,000,000 shares of Common
Stock, $.001 par value, of which 3,051,907 shares are issued and
outstanding. Prior to the New Closing, Sandbox will have no equity
securities issued or outstanding except those disclosed on Exhibit B
attached hereto, which contains a list of all holders of capital stock
of Sandbox and their respective share holdings. Except as disclosed on
Exhibit B hereto, there are no outstanding warrants, options,
agreements, convertible securities or other commitments pursuant to
which Sandbox is or may become obligated to issue any shares of its
capital stock or other securities of Sandbox, except as contemplated by
this Amendment and the Sundance Stock Purchase Agreement. Except for
certain rights of first offer under that certain Investor Rights
Agreement dated as of February 13, 1996 ("Investor Rights Agreement")
between the Predecessor and certain investors, which have been waived,
and in that certain Amended and Restated Stockholders' Agreement dated
as of July 13, 1995 (the "Stockholders' Agreement") by and among the
Predecessor and the Stockholders party thereto, a copy of which is
attached as Exhibit III to the Note and Warrant Purchase Agreement,
there are, and immediately upon consummation at the New Closing of the
transactions contemplated hereby there will be, no preemptive or
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similar rights to purchase or otherwise acquire shares of capital stock
of Sandbox pursuant to any provision of law, the Certificate of
Incorporation or Bylaws of Sandbox, or any agreement to which Sandbox
is a party, or otherwise.
5. Authorization to Close. Sandbox's obligation to issue the New
Warrant is conditioned upon its receipt of a consent and waiver from the
Investors that are parties to the Investors Rights Agreement in form and
substance acceptable to such Investors and Sandbox.
6. Representations and Warranties of Purchaser. Purchaser makes the
same representations and warranties with respect to the issuance of the New
Warrant and the New Warrant Shares that were made by Purchaser in Section 4 of
the Loan and Warrant Purchase Agreement with respect to the Initial Warrant and
Initial Warrant Shares. These representations include, without limitation,
Purchaser's promise not to transfer the New Warrant or any interest therein
without the prior written consent of Sandbox, and Purchaser's acknowledgment
that in connection with the exercise of the New Warrant, any holder will be
required as a condition to such exercise to become bound by and obligated under
the Stockholders' Agreement for so long as it shall be in effect.
7. Amendments to Term Note. At the New Closing, the Term Note shall be
amended as of October 25, 1996 as follows:
(a) Extension of Maturity Date. The Term Note is no longer due
and payable upon demand by Purchaser (the "Holder" as that term is
defined under the Term Note); however, Sandbox will pay Purchaser all
accrued interest through October 25, 1996 at the New Closing. The date
upon which the entire indebtedness (principal and interest) evidenced
by the Term Note shall be due and payable in full is extended from
October 25, 1996 until April 25, 1997.
(b) Interest Rate. The interest rate for principal amounts
under the Term Note shall be Ten Percent (10%) beginning as of October
25, 1996.
8. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may not be amended or modified, and no provisions may be waived,
without the written agreement of Sandbox and Purchaser.
9. Counterparts. This Amendment may be executed in counterparts, each
of which shall be enforceable against the party actually executing the
counterpart, and all of which shall constitute one instrument.
IN WITNESS WHEREOF, Sandbox and the Purchaser have executed this
Agreement as of the day and year first above written.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
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[SIGNATURE PAGE TO AMENDMENT TO LOAN AND WARRANT
PURCHASE AGREEMENT AND TO TERM NOTE]
SANDBOX:
SANDBOX ENTERTAINMENT CORPORATION
By: ___________________________________
▇▇▇▇ ▇▇▇▇▇▇
Its President
PURCHASER:
_______________________________________
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EXHIBIT A
FORM OF NEW WARRANT
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EXHIBIT B
Capitalization Schedule
October 22, 1996
I. AUTHORIZED CAPITALIZATION
Total Common Stock, $.001 par value: 10,000,000
Total Series A Convertible Preferred Stock, $.001 par value: 2,000,000
----------
Total 12,000,000
II. OUTSTANDING
A. Common Stockholders
----------------------
Name Shares
---- ------
▇▇▇▇ ▇. ▇▇▇▇▇▇(1) 1,025,000
▇▇▇▇▇ ▇. ▇▇▇▇▇(1) 737,500
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇(1) 737,500
▇▇▇▇▇ ▇▇▇▇▇ 229,590
R. ▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Kailey 125,015
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 131,535
Newtek Ventures II, L.P. 65,767
---------
Total Common: 3,051,907
B. Series A Preferred Stockholders
----------------------------------
Wasatch Venture Corporation 812,500
Newtek Ventures II, L.P. 375,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III 31,250
---------
Total Series A Preferred: 1,218,750
Total Common/Preferred Outstanding: 4,270,657
-----------------
(1) Little has the right to vote 250,000 shares held by ▇▇▇▇▇ and
250,000 shares held by ▇▇▇▇▇▇▇▇▇▇▇.
C. Common Stock Options(2)
--------------------------
Shares Price
------ -----
Name Optioned Per Share Vesting Schedule
---- -------- --------- ----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 57,970 $.10 11,590 shares on 8/1/96, 8/1/97 and 8/1/98;
11,600 shares on 8/1/99 and 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
▇▇▇▇ ▇▇▇▇▇▇ 86,970 $.10 17,390 shares on 8/1/96, 8/1/97 and 8/1/98;
17,400 shares on 8/1/99 and 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
▇▇▇▇▇▇ ▇▇▇▇▇▇ 115,960 $.10 23,190 shares on 8/1/96, 8/1/97, 8/1/98 and
8/1/99; 23,200 shares on 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
▇▇▇▇ ▇▇▇▇ 86,970 $.10 17,390 shares on 8/1/96, 8/1/97 and 8/1/98;
17,400 shares on 8/1/99 and 8/1/00
10,000 $.10 2,000 shares on 10/22/97, 10/22/98,
10/22/99, 10/22/00, and 10/22/01
Newtek Ventures II, L.P. 65,768 $.10 10,962 on 9/1/96, 3/1/97, 9/1/97, 3/1/98,
------ 9/1/98 and 10,958 on 3/1/99
Total Common Options: 453,638
-----------------
(2) All of the options listed in this section are pursuant to the 1995
Equity Incentive Plan.
D. Common Warrants
------------------
Shares Price Expiration
Name Under Warrant Per Share of Warrant
---- ------------- --------- ----------
Pickwick Group L.L.C. 229,500 $.80 9/15/05
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 76,500 $.80 10/25/05
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 38,250 $.80 10/25/05
▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ 76,500 $.80 10/25/05
Pickwick Group L.L.C. 38,250 $.80 10/25/05
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D. 76,500 $.80 10/25/05
--------
Total Common Warrants 535,500
TOTAL COMMON OPTIONS AND WARRANTS: 989,138
III. RESERVED
Type Number of Shares For What Reserved
---- ---------------- -----------------
Common 603,178 1995 Equity Incentive Plan
Common 535,500 Common Warrants
Common 1,218,750 Series A Preferred Stock
---------
Total Common Reserved: 2,357,428
IV. SUMMARY
Total Common Outstanding 3,051,907
Total Preferred Outstanding 1,218,750
Total Outstanding 4,270,657
Total Warrants/Options Outstanding 989,138
Total Common Outstanding - Fully Diluted(3) 5,259,795
---------------
(3) Assumes exercise of all outstanding warrants and options and
conversion of all outstanding preferred.
Schedule to Exhibit 4(j) - Form of Amendment to Loan and Warrant Purchase
Agreement and Term Note.
List of Purchasers:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Pickwick Group LLC
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇